AGRIBUSINESS MARKET STUDY - June 2020 - Calgary Economic Development
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AGRIBUSINESS
MARKET STUDY
June 2020
1
“Go to the centre of the store, you'll find a lot of
products processed elsewhere. And what's hurting is
that we are actually buying a lot of food from
elsewhere in the world with Canadian ingredients in
them. We ship out wheat, beef, pork and buy it back in
a bottle or a can at ten times the price.
We need more investments. That, to me, is the
weakest link we have"1
Sylvain Charlebois
Director, Agri-Food Analytics Lab Dalhousie University (April 17, 2020)
2
Table of Contents
1.0 INTRODUCTION ............................................................................................................... 7
1.1 Overview of Calgary Economic Development .................................................................................................. 7
1.2 Agribusiness Overview .................................................................................................................................. 7
1.3 Document Purpose ........................................................................................................................................ 7
1.4 Document Exclusions .................................................................................................................................... 8
2.0 SUBSECTOR ANALYSIS .................................................................................................. 9
2.1 Food, Beverage, and Meat Processing .......................................................................................................... 10
Overview - Food, Beverage, and Meat Processing .............................................................................................. 10
Trends - Food, Beverage, and Meat Processing ................................................................................................. 10
Major Players - Food, Beverage, and Meat Processing ....................................................................................... 11
Required Resources in Any Region - Food, Beverage, and Meat Processing ......................................................... 11
2.2 Crop Science ............................................................................................................................................... 12
Overview - Crop Science ................................................................................................................................. 12
Trends - Crop Science ..................................................................................................................................... 12
Major Players - Crop Science ........................................................................................................................... 13
Required Resources in Any Region - Crop Science ............................................................................................. 13
2.3 Animal Genetics .......................................................................................................................................... 14
Overview - Animal Genetics ............................................................................................................................. 14
Trends - Animal Genetics ................................................................................................................................ 14
Major Players - Animal Genetics ....................................................................................................................... 14
Required Resources in Any Region - Animal Genetics......................................................................................... 15
2.4 Agricultural Food ........................................................................................................................................ 15
Overview - Agricultural Food ........................................................................................................................... 15
Trends - Agricultural Food............................................................................................................................... 15
Major Players - Agricultural Food ..................................................................................................................... 16
Required Resources in Any Region - Agricultural Food ....................................................................................... 17
2.5 Summary – Subsector Analysis .................................................................................................................... 17
3.0 HORIZONTAL ANALYSIS............................................................................................... 19
3.1 Agricultural Technology .............................................................................................................................. 20
Overview - Agricultural Technology ................................................................................................................. 20
Trends - Agricultural Technology ..................................................................................................................... 20
Major Players - Agricultural Technology ........................................................................................................... 20
Current Geographic Hubs - Agricultural Technology .......................................................................................... 21
Agricultural Technology - Market Risks............................................................................................................. 21
Most Applicable Subsector - Agricultural Technology ......................................................................................... 22
Required Resources in Any Region - Agricultural Technology ............................................................................. 22
3.2 Artificial Intelligence ................................................................................................................................... 23
3
Overview - Artificial Intelligence ...................................................................................................................... 23
Trends - Artificial Intelligence .......................................................................................................................... 23
Major Players - Artificial Intelligence ................................................................................................................ 23
Current Geographic Hubs - Artificial Intelligence ............................................................................................... 24
Market Risks - Artificial Intelligence ................................................................................................................. 24
Most Applicable Subsector - Artificial Intelligence.............................................................................................. 25
Required Resources in Any Region - Artificial Intelligence .................................................................................. 25
3.3 Agri-finance, Business, and Support Services ............................................................................................... 25
Overview - Agri-finance, Business, and Support Services ................................................................................... 25
Trends - Agri-finance, Business, and Support Services ....................................................................................... 25
Major Players - Agri-finance, Business, and Support Services ............................................................................. 26
Current Geographic Hubs - Agri-finance, Business, and Support Services ............................................................ 26
Market Risks - Agri-finance, Business, and Support Services .............................................................................. 26
Most Applicable Subsector - Agri-finance, Business, and Support Services........................................................... 27
Required Resources in Any Region - Agri-finance, Business, and Support Services ............................................... 27
3.4 Summary – Horizontal Analysis .................................................................................................................... 27
4.0 GLOBAL AGRIBUSINESS HUBS ..................................................................................... 29
4.1 Salinas, California, USA ............................................................................................................................... 29
Overview ....................................................................................................................................................... 29
Notable Players .............................................................................................................................................. 30
Lessons to be Learned .................................................................................................................................... 30
4.2 St. Louis, Missouri, USA .............................................................................................................................. 31
Overview ....................................................................................................................................................... 31
Notable Players .............................................................................................................................................. 31
Lessons to be Learned .................................................................................................................................... 31
4.3 Raleigh-Durham, North Carolina, USA .......................................................................................................... 32
Overview ....................................................................................................................................................... 32
Notable Players .............................................................................................................................................. 32
Lessons to be Learned .................................................................................................................................... 33
4.4 Israel .......................................................................................................................................................... 33
Overview ....................................................................................................................................................... 33
Notable Players .............................................................................................................................................. 33
Lessons to be Learned .................................................................................................................................... 34
4.5 Summary – Global Agribusiness Hubs ........................................................................................................... 34
5.0 REGIONAL MARKET ASSESSMENT (CALGARY AND SOUTHERN ALBERTA) ................ 36
5.1 Region Overview ......................................................................................................................................... 36
5.2 Strengths ................................................................................................................................................... 38
Proximity to Agricultural Base ......................................................................................................................... 39
Well-Regarded Agricultural Training Institutions ............................................................................................... 39
Strong Research and Innovation Presence ........................................................................................................ 39
Deep Talent Pool ............................................................................................................................................ 39
Large, Established Anchor Tenants .................................................................................................................. 39
Government Programs and Policies Related to Agriculture ................................................................................. 39
4
Geographical Location .................................................................................................................................... 40
5.3 Weaknesses ................................................................................................................................................ 40
Industry Perception ........................................................................................................................................ 40
Domination of Oil and Gas in the Region ........................................................................................................... 40
Lack of Champion........................................................................................................................................... 41
Silos and Limited Information Sharing .............................................................................................................. 41
Industry Focused on More Traditional Agriculture and Commodities ................................................................... 41
Complexity Of Government Credits and Programs ............................................................................................. 41
5.4 Major Players .............................................................................................................................................. 41
5.5 Minor Players and Start-Ups ........................................................................................................................ 43
5.6 Regulations and Government Support .......................................................................................................... 43
Federal Regulation ......................................................................................................................................... 43
Provincial Regulation ...................................................................................................................................... 46
5.7 Innovation and R&D ..................................................................................................................................... 48
Protein Industries Canada ............................................................................................................................... 49
Canadian Agri-Food Automation and Intelligence Network (CAAIN) ..................................................................... 49
University of Calgary Simpson Centre for Agricultural and Food Innovation and Public Education .......................... 49
Telus AgTech Focus ........................................................................................................................................ 49
Olds SmartFarm ............................................................................................................................................. 50
5.8 Growth Outlook ........................................................................................................................................... 50
6.0 STRATEGIC INSIGHTS ................................................................................................... 51
6.1 Market Evolution ......................................................................................................................................... 51
Shifting Product and Ingredient Demand .......................................................................................................... 51
Increasing Demand for Food Transparency and Traceability ............................................................................... 51
Increasing Government Interest and Investment ............................................................................................... 51
Emergence and Acceleration of Agtech ............................................................................................................ 51
Industry Challenges Bringing New Business Models ........................................................................................... 51
6.2 Strategic Risks ........................................................................................................................................... 52
Climate Change and Resulting Natural Disasters ............................................................................................... 52
Regional Dominance of The Oil and Gas Sector ................................................................................................. 52
Lack of Investor Education in Agriculture ......................................................................................................... 52
Increased Nationalization ................................................................................................................................ 52
6.3 Sector vs. Horizontal Evaluation .................................................................................................................. 53
6.4 Opportunities for The Region ....................................................................................................................... 53
Opportunities – Subsectors and Horizontals ...................................................................................................... 53
Opportunities – Current Market Conditions ....................................................................................................... 56
7.0 CONCLUSION................................................................................................................. 57
8.0 ENDNOTES .................................................................................................................... 58
5
8.1 Definitions of Subsectors and Associated NAICS Codes................................................................................. 58
Food, Beverage, and Meat Processing .............................................................................................................. 58
Crop Science.................................................................................................................................................. 58
Animal Genetics ............................................................................................................................................. 58
Agricultural Food ........................................................................................................................................... 58
8.2 List of Agribusiness Companies in the Calgary and Southern Alberta Region (and Related Areas) ................... 59
Big Players .................................................................................................................................................... 59
Small Players ................................................................................................................................................. 61
9.0 REFERENCES ................................................................................................................ 64
Throughout this document, there are multiple global buyer profiles which are meant to provide a snapshot
of the changing consumer trends in important export targets for Alberta.
6
1.0 Introduction
1.1 Overview of Calgary Economic Development
Calgary Economic Development (CED) works with business, government and community partners to position
Calgary as the location of choice for the purpose of attracting business investment, fostering trade and
growing Calgary’s workforce 1. CED has a mission to “collaborate to advance opportunities in achieving
economic success, embracing shared prosperity and building a strong community for Calgary” 2.
One of CED’s focus areas for business development is the agribusiness sector. Agribusiness is the industry
that encompasses farming and farming-related commercial activities, and includes businesses at all stages
of the Agribusiness Value Chain.
1.2 Agribusiness Overview
Agribusiness is made up of all farming and farming-related commercial activities, across the Agribusiness
Value Chain, from sourcing through sale. The industry can be organized in many different ways, but
anchoring to a value chain helps depict the diversity of businesses in the industry. We see the Agribusiness
Value Chain as comprised of six activities which brings a product to its final destination – consumption.
Figure 1 – Agribusiness Value Chain
SOURCE PRODUCE TRANSFORM MAKE RETAIL
HORIZONTALS / ENABLING SERVICES
1.3 Document Purpose
This Agribusiness Market Study was commissioned by CED to provide a detailed, fact-based review of the
global and regional agribusiness market. Built upon both internal and available external data, it provides a
broad-based information set for stakeholders to consider when identifying opportunities for the region in
agribusiness, and forming a value proposition for Calgary and Southern Alberta in agribusiness moving
forward.
This document takes an in-depth look at agribusiness subsectors and horizontals, leading global hubs in
the space, and what is going on in our local region. It creates a foundation for future sector development
by addressing the following questions:
• What is happening in the external agribusiness market?
• What do we need to know about the priority subsectors and horizontals we have developed?
• What can we learn from other global agribusiness hubs around the world in developing our own
agribusiness ecosystem?
• What agribusiness activity is occurring in our regional market?
7
• What major market trends in agribusiness can Calgary and Southern Alberta capitalize on to grow
this sector locally?
• What are the risks posed by this industry for our region?
Answering these questions and others through this market study should act as a catalyst to develop new
ideas and opportunities for Calgary and Southern Alberta to capitalize on.
1.4 Document Exclusions
Prior to this report, CED started with four priority agribusiness subsectors and three priority agribusiness
horizontals, which have been analyzed in-depth in this document. These subsectors are indicated below
based on where they fall under the Agribusiness Value Chain.
Figure 2 – Horizontals and Subsectors Analyzed in this Report
There are many other subsectors and horizontals that make up the agribusiness industry, but this document
is focused on those deemed most important by CED.
While this document provides a fact-based analysis of the agribusiness industry, it does not illustrate
strategic options or provide specific strategic guidance. It is meant to inform future strategic decisions.
8
2.0 Subsector Analysis
CED has previously examined growing subsectors in the agribusiness industry, and identified the following
as high-growth opportunities for consideration by Calgary and Southern Alberta: Food, Beverage, and Meat
Processing; Crop Science; Animal Genetics; and Agricultural Food. This section looks at each of the
subsectors and examines their fundamentals, emerging trends, major players, as well as required resources
for the subsector to thrive. This analysis will inform a better understanding of these subsectors and provide
consideration on how Calgary and Southern Alberta could potentially succeed in developing them. The
specific North American Industry Classification System (NAICS) codes used to define each subsector can be
found in the Endnotes section at the end of the report.
Within each subsector, niche opportunities with high growth potential have been highlighted with this
icon
Figure 3 – Subsectors Overview
Food, Beverage, and
Crop Science Animal Genetics Agricultural Food
Meat Processing
The food, beverage, and Crop science refers to the Animal genetics refers to Agricultural food refers to
meat processing industry development of new seeds the production and sale of the creation of primary
mainly involves the process and crops, with enhanced products related to commodities such as live
of transforming raw health, disease resistance, veterinary health of animals animals and crops (without
agricultural commodities to and yield capabilities. It for food and breeding. This processing).
manufactured products includes the production of sub-sector includes the
ready for consumption or seed, soil, pesticides and collection, distribution and
further processing. fertilizer products. sale of animal genetics.
Key Statistics Key Statistics Key Statistics Key Statistics
• Estimated global market • Global market size of • Estimated global market • Canadian farm market
size of US$4.1 trillion by US$65.1 billion for crop size of US$6.11 billion as receipts of C$57.6 billion
2024 protection and $41.7 of 2018 in 2016
• Compound annual billion for commercial • Estimated CAGR of 4.9% • Average net worth per
growth rate (CAGR) of seed from 2019 to 2026 Canadian farm of C$2.8
4.3% from 2019 to 2024 • Crop protection market million, as of 2015
• C$112 billion in grew 6% in 2018
production value in
Canada
• Accounts for 16.4% of
Canadian manufacturing
sector GDP
9
2.1 Food, Beverage, and Meat Processing
Overview - Food, Beverage, and Meat Processing
The food, beverage, and meat processing sector is a
fast-growing part of the industry. It mainly involves the
process of transforming raw agricultural commodities
into manufactured products ready for consumption or
further processing. In Canada, the primary products in
this sector are varied and include meat, dairy, grain
and oilseeds, bakery and tortilla, fruit and vegetable
preserving, specialty foods, animal food, sugar and
confectionary, as well as fish and seafood3.
The food, beverage, and meat processing sector is
expected to have an estimated global market size of US$4.1 trillion by 2024, representing a compound
annual growth rate (CAGR) of 4.3% from 2019 to 2024 4. This sector is highly significant to the Canadian
economy, generating over C$112 billion in production value as the second largest manufacturing industry.
The sector contributes C$28.5 billion to Canada’s GDP, and accounts for 16.4% of the manufacturing
sector’s GDP 5.
Despite great significance to Canada’s economy, investment in this sector is lagging. Canada has 11,499
food, beverage, and meat processing facilities, of which 94.4% are small operations with under 99
employees. Capital investment as a percentage of sales has dropped by half from 1998 to 2016. The same
decline is also happening to Canada’s R&D investment in this sector, both compared to itself over time
(decline of 24% from 2008 to 2017) and compared to global competitors such as the United States and the
Netherlands 6.
Trends - Food, Beverage, and Meat Processing
Given the imbalance between the importance of the subsector and the lack of Canadian investment, many in
the industry are calling for the government to step-up efforts to address the gap to create a stronger culture
of innovation. The Agri-Food Economic Strategy Table is an industry-government collaboration, focused on
creating strategic advantages in the agriculture / food sector in Canada. They have set ambitious goals to
enable Canada to become “one of the top five competitors in the agri-food sector, recognized as the most
trusted, competitive and reliable supplier of safe, sustainable, high-quality agri-food products and an
innovator in value-added products to feed the dynamic global consumer” 7. The Table has also announced
plans to seize valued-added opportunities through technological advancement and innovation8.
In addition to the overall positive outlook and desire to grow, a few emerging industry trends also exist 9:
• Food Safety and Transparency: In the foreseeable future, food processing will be increasingly driven
by food safety and transparency. One recent major event in the food sector was the high profile
romaine lettuce recall in the US in 2019, which was a reminder of how important food safety is. The
industry needs to proactively create new solutions to ensure food safety and transparency to gain
and maintain consumer trust.
• Functional/Health Foods: Functional foods will become a major growth source. Consumers today
are very concerned about wellness. As a result, there is an increased consumer willingness to spend
more on foods that fit their health requirements (e.g. weight loss, special diet, etc.)
10• Plant-Based Protein: Demand for plant-based alternatives is growing. Many people are either
adopting a vegetarian diet or adding plant-based meat products to their diet. According to research
conducted by market research companies Nielsen and Spins, grocery sales of plant-based foods as a
substitute of animal products have grown to US$5 billion the past two years, or up by 29% 10.
• Increased Automation in Processing: In a study developed by Food Engineering, 22% of the
surveyed organizations reported that they adopted advanced automation technologies to help
manage rising labor costs and increase efficiency 11. This trend will have profound impact on the
bottom line and food quality/safety for food processing organizations.
• Cannabis Products: Cannabis food will play a bigger role. With legislation and consumer demand
changes, many companies have started looking at adding cannabidiol (CBD) to food and beverage
products. There is a desire among some consumers to consume food products that bring health
benefits or reduce anxiety and stress levels. This trend is more relevant in Canada, US, and parts of
Europe where laws permit personal-use cannabis products.
Major Players - Food, Beverage, and Meat Processing
Below are the top industry leaders in the Food, Beverage, and Meat Processing subsector.
Figure 4 – Food, Beverage, and Meat Processing Major Players
Company Annual Revenue Headquarters
US$93.46 billion 12 Switzerland
US$67.16 billion 13 US
US$37.26 billion 14 US
US$25.00 billion 15 US
US$52.33 billion 16 Belgium
Required Resources in Any Region - Food, Beverage, and Meat Processing
Several requirements or key factors that contribute to the success of attracting food, beverage, and meat
processors are identified as 17:
• Business guidance and support for new businesses. The Ontario government published a guideline
for new food, beverage, and meat processing companies in the province, which can be accessed on
their website.
• Funding. This can come in the form of grants or tax credits from governments.
11• Space. Adequate industrial space and industry-friendly zone.
• Transportation. Physical infrastructure and measures to support safe and cost-efficient
transportation.
• Industry Associations and Programs. Food industry business infrastructure like programs to address
labour/talent gaps, co-packing opportunities to help small businesses, and other industry-wide
initiatives. This includes adequate communication and coordination between different agencies and
jurisdictions over regulation, government lobbying, inspection etc.
• Affordable Labour. Affordable and available labour and a favourable labour environment.
• Population Density and Proximity to Customers. Certain agribusinesses (e.g. fresh meat
processing) require proximity to a large number of customers to succeed in a region, as their
products cannot be transported long-distance typically.
2.2 Crop Science
Overview - Crop Science
Crop Science refers to the development of new seeds and
crops, with enhanced health, disease resistance, and
yield capabilities. It includes the production of seed, soil,
pesticides and fertilizer products. The current market
size of this subsector is US$65.1 billion (crop protection)
and $41.7 billion (commercial seed) 18.
Trends - Crop Science
According to IHS Markit, the global market size of crop
protection is US$65.1 billion as of 2018, up by 6% from
the previous year. However, future growth is expected to
be much slower. The commercial seed market experienced a slow growth in the same time period.
Increasingly complex and strict regulation was one of the major factors affecting growth and innovation in
this space 19.
Specific subsector trends include:
• Crop Protection. Crop protection is one of the fastest growing areas in Crop Science. This is
mainly driven by factors such as growing population, urbanization, and a changing climate. As a
result of these factors, the amount of arable land has been decreasing, with less rural people working
in agriculture. The impacts of climate change need to be strongly considered, as it creates
uncertainty for crop yields, giving crop protection an increasingly important role 20.
• Increasing Chinese Market Presence. There is a growing Chinese presence in this subsector, with
leading Chinese organizations recently experiencing over US$12 billion in agrochemical sales. In
2017, Swiss pesticides and seeds giant Syngenta was taken over by China National Chemical
Corporation (ChemChina) for US$43 billion to help improve China’s domestic agricultural output 21.
The presence of Chinese state-owned and private organizations is growing quickly in this sector.
• Industry Consolidation and Reshuffle. Although the crop science sector has grown substantially in
the past, the number of major players has actually decreased, due to intense consolidation activities.
12The number of major agrochemical companies in the US and Europe dropped from 10 to 6 between
1990 and 2009 through M&A activities. As of today, there are 5 major players in this subsector,
namely Bayer, DowDuPont (now Corteva), BASF, and Syngenta (now a part of ChemChina), and FMC.
This was a response to poor business performance caused by increasingly strict regulation, growing
R&D expense, and a number of other factors 22.
Major Players - Crop Science
The following organizations are the largest Crop Science companies in the world. Most of them have very
strong presence in either Calgary or Canada.
Figure 5 – Crop Science Major Players
Company Annual Revenue Headquarters
US$429.21 billion
Switzerland
(ChemChina) 23
US$66.43 billion 24 Germany
US$48.77 billion 25 Germany
US$13.85 billion 26 US
US$4.61 billion 27 US
Required Resources in Any Region - Crop Science
Crop science requires specialized talent and research capabilities, meaning that for crop science to thrive, it
is important to have access to leading educational institutions with specific programming.
Crop science is also a capital intensive industry that is currently facing increasingly stringent regulations
that are driving market uncertainty (the significant capital requirements are illustrated below in Figure 6).
Because of this, organizations need to have strong operational viability to make new investments in the
industry. A number of regional measures can be taken to improve operational viability, including:
• Strong funding support
• Insurance
• Policy friendliness
• Competition protection for small start-ups from major corporations
Calgary and Southern Alberta have many of these resources required for Crop Science to be successful,
such as support programs and policies, and strong educational institutions.
13Figure 6 - Growing Costs in Developing New Crop Protection Products 28
2.3 Animal Genetics
Overview - Animal Genetics
Animal genetics refers to the production and sale of products related to
veterinary health of animals for food and breeding. This subsector includes the
collection, distribution and sale of animal genetics (e.g., embryos, semen, and
live animals for breeding). 29
The global animal genetics sub-sector had an estimated market size of US$6.11
billion in 2018. 30
Trends - Animal Genetics
Animal genetics is a fast-growing industry with an estimated CAGR of 4.9% from
2019 to 2026. 31 The fastest-growing market is Asia Pacific whereas the largest
market is still North America 32. In Canada, the volume of animal genetic exports (for breeding purpose) grew
from ~310 million units to ~330 units between 2015 and 2019. Within these, purebred horse exports
grew fourfold within 4 years, while hatching eggs export saw a growth of ~54%. In contrast, beef cattle
export saw a drastic decline, from ~23 million units in 2015 to ~8 million in 2019. As of 2019, 33% of
Canada’s animal genetics export products were dairy semen 33.
Some key factors that are driving the industry growth are 34:
• Growing population
• Rapid urbanization
• Growing preference for animal protein in emerging markets
• Adoption of progressive genetic practices (e.g. AI, embryo transfer)
Major Players - Animal Genetics
The animal genetics industry is relatively concentrated with a few major players dominating the market35.
14Figure 7 – Animal Genetics Major Players
Company Annual Revenue Headquarters
£488.5 million 36 UK
US$414 million 37 US
US$6.26 billion 39 US
Private Company The Netherlands
Required Resources in Any Region - Animal Genetics
The future of animal genetics will largely revolve around responding to global demand and adopting
emerging technologies to improve product offerings. To meet these needs, top talent and research
institutions are required for the industry to thrive in a region. In addition, affordable labour and techniques,
and associated training programs and facilities will also contribute to the success of this sector.
2.4 Agricultural Food
Overview - Agricultural Food
Agricultural food refers to primary commodities such as live
animals and unprocessed crops. According to the
Government of Canada, Canadian farm market receipts were
C$57.6 billion in 2016. The average net worth per farm in
Canada was C$2.8 million as of 2015 40. While an estimated
growth rate is not available due to the huge size of the
agricultural food market, the Food and Agriculture
Organization of the United Nations projected that the annual
growth rate of production and demand for agricultural
commodities is 1.6% 41.
Trends - Agricultural Food
With a growing world population and a corresponding increase in food demand, agricultural commodities
play vital role in ensuring world food security. There are a few emerging trends that will fundamentally
impact this sector:
• Impacts of Urbanization. Urbanization is both accelerating diet transitions in emerging markets and
changing the types of employment in the sector. According to the United Nations, 68% of the world
population is expected to live in urban areas by 2050 42. This is shift is particularly strong in
15developing economies, including those in Asia and Africa. In highly urbanized areas, people consume
a larger proportion of processed food and food with high nutrients. Consumption pattern changes
also mean changes in sector employment: there will be a major shift from people working in primary
agriculture to joining food processing, transport, vending, etc 43.
• Bioenergy. The International Renewable Energy Agency (IRENA) has developed a global renewable
energy roadmap, REmap 2030, in an effort to drastically increase the share of renewables in the
global energy usage 44. In the report, bioenergy is indicated to be the “single most important
renewable resource” if all the other options have been successfully implemented by 2030. Bioenergy
refers to the combustion of biomass in such forms as food, animal waste, and charcoal, and the
production of biofuel from plants, making agricultural food a primary input into the production of
bioenergy. By 2030, bioenergy could account for 60% of global renewable energy usage, or 20% of
the global primary energy supply 45.
• Increased Nationalization. In recent years there has been an increasing effort by some international
governments to increase nationalization and domestic production. Events such as Brexit, the
US/China trade war, and the effort to bring manufacturing back to the US highlight how some
countries are growing skeptical of the benefits of globalization. There is a risk that the international
trade and exports of Alberta agriculture products may be impacted should this trend continue.
• Implications of COVID-19. Since the emergence of the COVID-19 situation, many countries started
banning exports of key primary agricultural products. Russia, the world’s leading food exporter,
announced a 10-day ban on buckwheat and rice. After that, Kazakhstan, Ukraine, Vietnam, and
Cambodia all followed suit, to some extent. Bans on food exports during times of global crisis are not
new. A similar series of events occurred in 2008/09 during the financial crisis, further threatening
global food security and supply chain46. Primary agricultural products have an important role in food
security within a country, and this becomes particularly relevant at time of crisis. The response to
COVID-19 will continue to evolve in 2020 and beyond, but there are sure to be implications for the
agribusiness industry in the coming years.
Major Players - Agricultural Food
Traditionally, the agricultural food market was dominated by large Western corporations (Archer Daniels
Midland [ADM], Bunge, Cargill and the Louis Dreyfus Company, together commonly known as “ABCD”).
Recently, a Chinese company, Cofco, joined the list.
Figure 8 – Agricultural Food Major Players
Company Annual Revenue Headquarters
US$113 billion 47 US
US$64.69 billion 48 US
US$36.5 billion 50 The Netherlands
16US$41.14 billion 52 US
RMB 471.1 billion 53
China
(~$US 66.52 billion)
Required Resources in Any Region - Agricultural Food
Abundant land mass, favourable climate (or supporting irrigation/greenhouses), and supporting
infrastructure are the required resource for the success of primary agriculture industry. Well-functioning
supply chains, business-friendly regulatory environments, and the presence of available and affordable
workers are factors that will contribute to regional sector growth.
Calgary and Southern Alberta have the land mass and infrastructure required for success in this area. In
order to be more competitive, the Region can create a more agribusiness-friendly regulatory environment.
2.5 Summary – Subsector Analysis
The four subsectors each have high growth potential, as compared in Figure 9 below. (Note that CAGRs +
sources can be found throughout the subsectors section. The CAGR used for agricultural food is the rate of
growth for commodities, and the CAGR for crop science is the rate for crop protection growth specifically).
Figure 9 – Comparison of Subsector Growth Rates
The subsectors all continue to be affected by emerging global trends, such as urbanization, the rise of
developing economies, and climate change. At the macro level, the capability to address these challenges
will define a region’s ability to tap into the global market of the next generation. From a micro perspective,
trends creating specific growth opportunities include functional/health foods, plant-based protein, cannabis
products, crop protection, purebred horses and hatching eggs, as well as bioenergy products and solutions.
In order for any subsector to grow and thrive in a region, the most commonly required resource is a
concentered effort to support subsector growth, such as business-friendly policies and programs. Funding
and transportation play an important role in asset-heavy subsectors, such as Agricultural Food, and Food,
Beverage, and Meat Processing, whereas access to talent, research capability, and training matter more for
Animal Genetics. For Calgary and Southern Alberta to focus on developing an individual subsector, attention
should be directed to ensuring that the applicable “required resources” are present to promote the growth
of both existing and new players.
17Global Buyer Profile | CHINA
China has nearly 1.4 billion people to feed55. As of 2014, 45.23% of China’s population live in
urban areas, and that number continues to grow. China has 9.6 million km2 of land and 3
million km2 of offshore territory 56. As Alberta’s second largest trade partner, exports to China
increased by 32.4% between 2017 and 2018, totaling C$2.6 billion 57. In the future, China will
continue to play a growing role in Alberta’s agriculture exports due to its ever-growing
population, strong economy, and fast urbanization.
Consumer Trends
China’s demand for agricultural products will continue to rise in the coming years due to supply pressure of
agricultural products, growing demand from population increase and living standard improvement, and
reduced motivation for domestic production58. Some emerging trends influence consumer behaviours:
Light Eating: The low consumption of foods low in calories, sugar, and fat. Light eating a new Western
trend catching on, but is also part of the traditional medicine philosophy that has become popular with
the middle-class who is more conscious of health and lifestyle 59.
International Brands: Middle-class consumers who can afford higher prices of imported products are
increasingly seeking products of established international brands, valuing “life quality” above price..
Internet and Cross-Industry Cooperation: Celebrity food attracts young demographics to consume food
recommended by internet influencers 60. Some businesses have leveraged internet celebrities to promote
their brands and products are no longer evaluated on quality and price, but on packaging and “story” 61.
Relevance to Alberta
Canadian ag products have strong reputation in China. Alberta should pay attention to emerging trends,
customize products to better meet modern consumer demand, and capture value by growing value-add
product exports and establishing partnerships, increasing presence, and telling a unique “Alberta story.”
Market Risks
Political Risk: The dynamic global political environment introduces a risk of Alberta’s agriculture exports
to China being adversely affected. In 2018, after a high profile arrest of a Chinese national in Canada,
China revoked an import permit for one Canada’s largest grain processors 62, causing concerns among
Canadian producers. Political risks will continue and Alberta must be prepared.
Cultural Risk: Producers who would like to expand in China need to understand the importance of
showing cultural respect to the market and consumers. Other high profile importers such as Dolce &
Gabbana have offended the general public in China, leading to backlash and boycotts 63. D&G was
essentially removed from the market (which buys 1/3 of global luxury products 64) and has not returned.
183.0 Horizontal Analysis
CED has identified several priority ‘horizontals’ which cut across agribusiness subsectors that Southern
Alberta should focus on. These horizontals were selected based on their growing importance in
agribusinesses and on Southern Alberta’s potential in attracting businesses operating in these horizontals.
Each horizontal cuts across each subsector analyzed in the prior section and should be considered in
combination with those subsectors. This section looks at three focus horizontals: Agricultural Technology,
Artificial Intelligence, and the combined grouping of Agri-finance, Agri-business, and Support Services.
Within each priority subsector, niche opportunities with high growth potential have been highlighted
with this icon
Figure 10 – Horizontals Overview
Agri-finance, Business, and
Agricultural Technology Artificial Intelligence (AI)
Support Services
Agricultural technology (also called AI’s application in agriculture includes Agri-finance, business, and support
“agri-technology” or “agtech”) the use of agricultural robots, services includes specialized financial,
includes the development, design, predictive analytics (machine business, and consulting services that
testing, and production of specialized learning), and other advanced provide critical financing, business
software and hardware to support technologies and algorithms to transactions, management, and
core agriculture activities. increase the performance of investment that enables the
agribusinesses. agribusiness sector.
Key Statistics Key Statistics Key Statistics
• Global smart agriculture’s market • The global AI market produced • Agriculture banking market size of
size was US$5 billion in 2016; US$584 million in revenue in US$16 billion in the US; annual
expected to grow to US$15 billion 2018 growth rate of 2.4% between
by 2025 • Predicted CAGR of 38.3% going 2014-2019
• Precision farming’s market size is forward • Agriculture insurance market size
estimated to be US$7 billion in of US$32 billion worldwide;
2020; expected to grow to annual growth rate of 4.1% from
US$12.8 billion by 2025 2021 to 2026
193.1 Agricultural Technology
Overview - Agricultural Technology
Agricultural technology (also called “agri-technology” or
“agtech”) includes the development, design, testing, and
production of specialized software and hardware to support
core agriculture activities. As technology can apply to almost
any area of agriculture, this horizontal can be considered a
core enabler that crosses several sub-sectors. For example,
technologies enable functions across the sector, including
plant monitoring, product management, field monitoring, and
biometrics.
Trends - Agricultural Technology
Growth in agtech has been significant. The global market size for Agricultural Technology was US$ 494.9
billion in 2018. It expected to grow at a CAGR of 8.1% and become a USD 729.5 billion industry by 2023 65.
Specifically, two high-growth areas are:
• Smart Agriculture / Internet of Things (IoT). Internet of Things (IoT) is a key system that makes
smart agriculture possible. It leverages internet connectivity to virtually link multiple devices (e.g.
sensors) together and allows farmers to manage their farm digitally and centrally. The current global
smart agriculture market was worth over US$5 billion in 2016, with an expectation to eclipse US$15
billion by the end of 2025; a cumulative annual growth rate of 13% between 2017 and 2025. 66
• Precision Farming. Precision farming refers to the use of information technology, GPS, drones
and other technologies to make the practice of farming more accurate 67. It is expected to grow from
US$7 billion in 2020 to US$12.8 billion by 2025. 68
The acceleration of the rate of industry adoption of agtech is likely to continue over the coming years.
Opportunity exists today to take advantage of the growing ecosystem, increased available capital, and a
growing interest by traditional players in the industry 69.
In developed markets, agtech adoption amongst those at the farm level continues to rise, led largely by the
US. The rate of adoption varies, with immense opportunities in some areas. For example, adoption in the
bulk crop production space is much more advanced than adoption in livestock and specialty crops 70.
Major Players - Agricultural Technology
Agtech contains dozens to hundreds of players across the horizontal, covering each component of the
agriculture value chain. SVG Venture’s THRIVE publishes an annual list of the top-50 firms in agtech 71. The
five largest (by employee count) of their top 50 firms, as outlined in the 2020 report, are outlined below.
20Figure 11 – Agtech Major Players
Company Products and Services Offerings
Zymergen is an American biotech company. It uses automation, machine
learning, and genomics to research, develop, and manufacture microbes for
Fortune 500 companies.
Solinftec is a Brazil based digital agriculture company focused on using
platform-agnostic software to improve farm management and forecasting.
Farmers Business Network (FBN) empowers growers to capture and analyze
their own crop data using cutting edge methods that include drones, mobile
apps, embedded sensors and ground cameras.
Plenty is an American indoor vertical farming company. It develops and
maintains proprietary vertical farming systems that enable farmers to increase
crop yields. Plenty locates their operations near city centres to ensure the
freshest produce makes it to customers.
Indigo is an agtech company based in Boston. It provides a broad range of
services that connect buyers, growers, and carriers, as well as supporting the
transition of growers to more carbon efficient farming and regenerative
farming.
Current Geographic Hubs - Agricultural Technology
While some hubs take a broader approach, agtech specialization can enable smaller ecosystems to
outperform larger ecosystems in terms of start-ups created by the investment dollars attracted. St. Louis
provides a prime example of this: by building from existing expertise of research institutions, universities,
and large corporations to develop innovation infrastructure, St. Louis has been able to build a reputable
specialization at the nexus of agriculture, medicine, and health care.
For a deeper look at two of the strongest agtech hubs in the world (Salinas and St. Louis), refer to section 4
of this report on Global Agribusiness Hubs.
Agricultural Technology - Market Risks
Adoption Slows: Farmers face a challenging financial environment related to low crop prices, elevated debt,
and stagnating farm income. International trade wars have further exacerbated these concerns by changing
the dynamics of the market. Should this continue, farmers are likely to be more cautious with how they
deploy capital, including on technology-based solutions.
Connectivity: In developed and developing markets alike, rural connectivity continues to be a challenge.
While satellite connectivity and low-powered wide area networks have improved the situation, there remains
significant bandwidth challenges that present a hard obstacle to the use of agtech for many farmers.
21Incompatibility of Solutions: As the number of competitors and offerings in the market increases, the needs
for standards and improved compatibility will become essential. Handled incorrectly this risk may
necessitate industry or government collaboration, or it may form a barrier to continued adoption of agtech.
Cybersecurity: As with any connected devices, cybersecurity and data will become increasingly significant
risks. Some farmers may shy away from technology should high-profile breaches occur.
Most Applicable Subsector - Agricultural Technology
Agricultural Food, Food Processing, and Animal Genetics. Agtech is applicable to most subsectors. Its
predominant usage is on Agricultural Food, where the technologies enable plant monitoring, product
monitoring, animal biometrics, etc. Technology has also helped the Animal Genetics sector through new gene
transfer biotechnologies, in-vitro production, and cloning and sexing of embryos 73. In Food, Beverage, and
Processing, robotics and machines are helping food processors create efficiency and ensure safety.
Required Resources in Any Region - Agricultural Technology
As demonstrated by the world’s largest agtech hubs, building momentum behind agtech requires a number
of key components:
• Early-stage funding: Availability of government grants, endowments, and venture capital funding is
critical to bringing innovators and entrepreneurs to a region
• Access to business support and facilities: Having a support structure in place, including service
providers and government agencies, enables large agtech organizations and entrepreneurs to focus
on the core of what they do
• Access to networks: Creating natural networking opportunities allows agtech companies to meet
funders, partners, and potential customers
• Customer accessibility: As with access to networks, it’s critical to create or ensure a potential base
of viable customers in the market to attract agtech companies
• Availability of talent: Perhaps more than any other horizontal, the availability of experienced
research and technology talent can make or break an agtech hub. Early stage agtech organizations
are looking for leading talent to help them make the next leap; without that talent, they are likely to
go elsewhere
• Long-term commitment: It’s important that a region expresses a long-term commitment to agtech,
including building the appropriate infrastructure (labs, hubs, districts, etc) and setting appropriate
regulatory conditions.
• Major players and critical mass: The existence of major players in a region can often attract more
companies, talents, and investment into the region.
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